Awareness on car leasing yet to pick up
Mumbai, Jun 12 The concept of car leasing in India is still at a nascent stage, thanks to low awareness levels among human resource (HR) personnel in firms, among other reasons. Operational car leasing is beneficial because investments in vehicles and other ensuing services are outsourced, and this helps keep the balance sheet clean of such investments.
“In India, car leasing is just 2% compared to 60% in Europe,” says Liam Donnelly, CEO, Arval India, adding, “HR personnel need to understand the benefits to implement an HR car policy.” Despite this, Donnelly sees immense growth potential in the Brazil, Russia, India and China (Bric) region for operational car lease. Arval India, a BNP Paribas Bank subsidiary, has 110 cars on lease at present and sees 9,000-10,000 cars in two-three years.
Pierre Vermeulen, commercial director, LeasePlan India, said, “People are looking at cars not as assets but to be leased for convenience. The present economic environment is another factor.” LeasePlan has already invested close to Rs 1,000 crore in the country, which will double in future. It has 17,000 cars on lease, more than half the 30,000 cars on operational lease in India. “A fixed amount has to be paid per month, which is derived considering the age, mileage, services including insurance, replacement, damage waiver and accident management, 24 hour assistance, pick and drop facility, maintenance & repair and interest,” explains Donnelly. Further, car leasing also offers tax relief and saves up to 20%-30% since the fixed lease amount per month is paid pre-tax and is part of employee’s cost to the company (CTC), adds Vermeulen. At present, corporates lease out cars to senior employees, but are opening up to leasing to middle employees too. Earlier, A- segment cars were popular among the coporates. “Now they are moving to more expensive cars to B and C segments,” explains Vermeulen. Some of the most popular models include Maruti Suzuki Swift, Honda City and Honda Accord, among others.
“Tata Motors, M&M, Toyota and GM cars also have a demand,” said Donnelly. Since the lease extends from 15 months to five years and cars are generally replaced after three years, it turns out to be a good deal for original equipment manufacturers.
From FinancianExpress.com
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